Is becoming a realtor a viable choice?

Question

If I plan to own real estate investments as a viable source of income in my later years (hopefully sooner) would becoming a realtor be beneficial to me?

I’m 24 years old, I’ve been a mechanic for the last 5 years and the toll it’s taken on my body is misery at this point. I’ve never really been interested in being a mechanic it’s just what I grew up knowing.

I’ve always been interested in real estate investing and investing in general for a long time. The older I get and the more financial literacy I learn, I’m learning that my current career choice is not the direction I want to go in. Don’t get me wrong, I love working on cars. I enjoy it more when I can do it on my own time and not rely on it as my income.

So my question is, would it be worth changing careers towards a real estate agent than staying in my current field to pursue my investment career

Jake Davis · Answer

@Terrell Garren I like that answer. Being an investor you’re pretty much playing a game of chess and a realtor is just a piece on the board. Yes, I’m not being an investor for it to be a job in the long term, I would love for it to give me the financial freedom I want.

Do you have any tips for balancing a full time job with an investment career? It Almost seems like I’m running myself into the ground trying to fit the real estate part into my work schedule since I’m working 60 hours a week at my current job.

Terrell Garren · Answer

Just one old guys opinion. An RE agent is just another way of trading your time for money (i.e. job). It does not move you to the lower right on the good old cash flow quadrant where your money works for you.  If your passion is to be an agent, go for it.  If you real goal is freedom, learn how to invest in RE.  Outside of handling the RE contract paperwork, i can't think of much I've learned from agents.  However, I've learned a significant amount from investors.

I made an offer on an MLS SFH a couple weeks ago.  My agent made the comment "I think it is a good buy".  I said "oh yeah, explain the rehab and rental #s to me".... silence.  She is a very good agent, however, she speaks in terms of owner occupants, not investors.

Best, Terrell

Bryan Scott · Answer

@Jake Davis.  Before you sign up and pay for your licensing course, identify and interview 2-3 brokers, where you might wish to hang your license once you get it, so that your eyes are wide open to the costs and the issues - high/low, good or bad.  Find out what they require of their new agents and how much it costs to obtain and maintain this license and assess whether or not these costs justify whatever you have intended in your full or part-time real estate career.

The process isn't cheap by any means, but you can minimize costs depending on where you decide to hang the license.  Some brokers are much "cheaper" than others, but it all depends on the services they offer their agents.  Realtor, or non-Realtor is another question, because Realtor status costs more - quite a bit more (BTW - if your broker is a Realtor, you cannot be a non-Realtor.  It works the other way as well:  Non-Relator Broker = Non-Realtor agents).

You also have to pay for E & O insurance and take a certain number of continuing education credits every license period, some of which can be FREE as a Realtor, but most of which costs money.

Beyond the above, I suspect you can cover your expenses on just one, full commission transaction each year, depending on the above.  One of the advantages is that you will have access to MLS (also a monthly recurring expense).  This and other factors will begin to open doors.

At minimum, if you can "pay yourself" or save one side of the transaction commission, that is not bad at all.  If your average transaction was, say, $400K, this means about $12K you save (or, get paid at closing) for each deal you do - less the split you pay your broker.

Seriously consider doing Real Estate part-time and stay with your J-O-B.  You will know when it is time to drop the J-O-B.

Best of luck to you.

Marcus Auerbach · Answer

I have been an investor much longer than an agent. Contrary to my expectations it did not only benefit me as an investor - it takes a lot of attention away from investing and towards my clients. Of course it has its benefits too, but you have to do it full time in order to get good at it and have enough exposure to really understand the market.

I love working on cars too, but just because I have done a few things I am far away from your skill lever as a full time mechanic. Getting licensed only to broker your own deals is a terrible idea! It's like getting a licenses that allows you to work on your own transmission - you still dont know how to do it lol

In general, the drop out rate is close to 90% and there are very few active agents that make it past the 2 year mark. People think its easy and when they find out most of them will return to their previous job. If you make it past 2 years the sky is your limit.